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Renewable energy developers face risks. Yieldcos come in for the rescue.
Developers of utility-scale renewable energy take on significant risks and uncertainties when building new solar or wind plants. The development, R&D and construction stages are time- and capital-intensive. They're much riskier than once solar or wind farms are up and running and generating energy. Investors looking to put their money into the renewable sectors are often cowed by this risk.
Yieldcos were created to solve this problem. They're publicly traded corporate entities that own, operate and manage portfolios of energy assets. The sale of renewable energy assets to yieldcos give wind and solar developers a steady source of capital to fund future projects, while yieldcos generate revenue by selling the renewable energy that their assets generate to utility companies.
Investors can purchase shares of yieldcos rather than those of renewable energy developers to protect themselves from the risks and uncertainty of project development. Cash flows from the renewable assets are then used to distribute dividends.
In short, yieldcos are a win-win for both renewable developers and investors: by uncoupling electricity-generating assets from project development, yieldcos give steady cash flow to developers and dividends to investors. Yieldcos are the market-based solution that channels investments to scaling renewable energy.
Here are the yieldcos making it happen.
We scrutinize every yieldco on the US stock market to choose the ones leading the clean energy transformation.
After excluding penny stocks whose share prices were lower than $0.50 in our last update, we look at their operational asset portfolio. If they generate more energy from fossil fuel-based assets (usually oil & gas) than from renewable energy assets, they're out. If they own any coal plants, they need to have a plan to retire all of them within the next three years. Their renewable investments need to exceed state and federal mandates. And finally, they need to have a demonstrated track record of reducing greenhouse gas emissions in the past.
So the Climate Index represents a list of all of the yieldcos that are at the forefront of expanding renewable energy. If you are a Carbon Collective member, you own all of these companies through the Climate Index.
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|Brookfield Renewable Energy Corporation (BEPC)||
BEPC owns hydroelectric, wind, and solar assets across the world, offering clean energy to utilities. Yieldcos are key to expanding clean energy
|Clearway Energy, Inc. (CWEN)||
Clearway Energy owns and operates a portfolio of solar, wind, and other energy sources. Yieldcos are key in expanding investments into renewables
|NextEra Energy Partners (NEP)||
NextEra is a yieldco that operates wind and solar farms as well as natural gas pipelines in the US. Yieldcos help raise investments for clean energy
|Atlantica Yield (AY)||
Atlantica Yield is a yield that owns 1.6 GW of renewable energy assets around the world. Yieldcos are valuable key in expanding investments in renewables